Japanese Quake Sends Equities, Oil, Yen On Violent Moves

Agustino Fontevecchia
, ContributorFrom global billionaires to art market fraud, I cover power and moneyOpinions expressed by Forbes Contributors are their own.

A map of the earthquake from Japan's Meteorological Agency

While the possible destruction of the latest, 7.4-magnitude quake that hit Japan on Thursday night is still to be assessed, markets reacted violently to the news. From equities to commodities, many asset classes went on knee-jerk dives, before partially recovering from the intra-day lows.

U.S. equities fell off a cliff on the news, with the Dow dropping almost 93 points in a matter of minutes, attempting to rebound, and then falling back down close to its previous trough. By 12:21 PM in New York, the Dow Jones Industrial average was down 0.3% to 12,392, followed by the S&P 500 which fell 0.1% to 1,333. The Nasdaq was trading down 0.6% as well to 2,799.

The 7.4 magnitude quake hit 60 miles off the Japanese coast at a depth of about 25 miles, prompting a tsunami warning with waves expected to reach 2 meters, up from half a meter in the initial advisory, and finally canceled, according to Japan’s meteorological agency. Striking near the epicenter of the March 11 quake, fears that a repeat of the devastation caused by the 9.0-magnitude circled the globe. Tepco, which operates the beleaguered Fukushima Daiichi plant, announced none of the reactors had suffered additional damage from Thursday’s quake. (See Another Earthquake Hits Japan, Tsunami Warnings Issued).

Corporations with large exposure to Japan also felt the sting on their stock prices. Sony, Toyota, Aflac, and Tiffany & Co, for example, all dropped precipitously on news of the quake. While Toyota and Tiffany managed to recoup their losses, trading up 0.1% and 0.2% respectively, Sony and Aflac were still deep in the red, down 0.9% and 0.7% respectively.

Other asset classes were sent on violent moves through the day. Oil, for example, dropped 63 cents on the news to $108.48 in New York, only to quickly bounce past its previous ranges to its highest point in five days, $109.38. In the currency markets, the U.S. dollar – Japanese yen exchange rate tumbled dramatically, signaling a strengthening of the yen. The USDJPY was trading down 0.59% to $84.9850.

As could have been expected, volatility spiked on the news. The VIX quickly broke to the upside, trading up 4.7% to $17.70.